For Prelims: Semiconductor Mission 2022,  Moore's law, US CHIPS and Science Act 2022, Information Technology Agreement, 1996, Assembly, Testing, Packaging and Marking (ATMP)

For Mains: Semiconductor manufacture in India.

Highlights of the Article:

• India's Semiconductor Mission aims to establish a domestic semiconductor fabrication plant to reduce dependence on imports and address the growing market, which makes India vulnerable to coercion.
• Previous attempts to set up a semiconductor fab in India failed, highlighting the challenges in mobilizing resources and ensuring financial viability.
• China's success in the semiconductor fab industry serves as a lesson, emphasizing the benefits of acquiring existing fabs for technological stability, supply chain ecosystem, and market presence.
• Investment in a semiconductor fab is risky, requiring substantial production volumes for economic viability, and relying solely on the domestic market is inadequate.
• Developing a chip manufacturing ecosystem is challenging, involving training, clean water availability, handling chemicals and gases, and ensuring high-quality production. Considering the type of fab and potential intermediate steps like ATMP facilities are crucial for success.

Context:

The context of the article is the effort by the Indian government to establish a semiconductor fabrication plant (semiconductor fab) in India.

UPSC EXAM NOTES EDITORIAL ANALYSIS:

1. Introduction:

The article discusses the Indian government's Semiconductor Mission, which aims to establish a semiconductor fabrication plant in India. It provides an analysis of the challenges and strategic considerations involved in this endeavour, along with lessons that can be learned from China's success in the semiconductor fab industry.

2. Previous Attempts and Challenges:

• The article discusses the unsuccessful attempts made in the past to establish a semiconductor fabrication plant in India.
• The 2007 Special Incentive Package (SIP) yielded no response, while the 2012 Modified SIP came close to success but failed to mobilize resources.
• Challenges such as resource mobilization, financial viability, and the complexity of semiconductor fabs were major obstacles.

3. Lessons from China's Success:

• China's success in the semiconductor fab industry provides valuable insights for India.
• China acquired loss-making fabs, received substantial government support, and built a robust chip production industry.
• India can learn from China's acquisition strategy, leveraging stabilized technology, an established supply chain ecosystem, and an existing market presence.

4. Investment Risks and Global Competition:

• Investment in semiconductor fabs is high-risk, requiring significant production volumes for economic viability.
• Relying solely on the domestic market is insufficient, as global sales play a crucial role.
• The US and the European Union are investing heavily in semiconductor manufacturing, intensifying global competition.

5. Developing a Chip Manufacturing Ecosystem:

• Establishing a chip manufacturing ecosystem poses significant challenges.
• Training human resources, ensuring clean water availability, handling chemicals and gases, and maintaining high-quality production standards are crucial.
• Choosing the right type of fab (logic/processor, memory, or analogue) and considering intermediate steps like setting up Assembly, Testing, Packaging and Marking (ATMP) facilities are important factors.

6. Conclusion:

• The article concludes by emphasizing the importance of India's Semiconductor Mission and the need to establish a semiconductor fab in the country.
• It highlights the challenges faced in previous attempts, draws lessons from China's success, and emphasizes the risks, global competition, and ecosystem development associated with semiconductor fabs.
• Taking strategic action in the semiconductor industry is crucial for India to reduce dependence on imports, enhance domestic capabilities, and remain competitive in the global market.

Source: The Hindu